The German Energy Crisis: A TENK-based Fiscal Policy Analysis

Alexandra Gutsch and Christoph Schult

No 1/2025, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: We study the aggregate, distributional, and welfare effects of fiscal policy responses to Germany’s energy crisis arising in 2022 using a novel ten-agent new Keynesian (TENK) model. The crisis, compounded by the COVID-19 pandemic, led to sharp price increases and significant consumption disparities. Our model, calibrated to Germany’s income and consumption distribution, evaluates key policy interventions. We find that untargeted transfers had the largest short-term aggregate impact, while targeted transfers for lower-income households were most costeffective. Other instruments yielded comparably limited welfare gains. The results highlight how targeted fiscal measures can address distributional effects and stabilize consumption during crises.

Keywords: DGE; energy crisis; fiscal policy; income distribution; TENK (search for similar items in EconPapers)
JEL-codes: E21 E62 Q43 Q48 (search for similar items in EconPapers)
Date: 2025, Revised 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:309416

DOI: 10.18717/dpdtzw-4c15

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